LifePoint Hospitals Reports First Quarter 2013 Results

  LifePoint Hospitals Reports First Quarter 2013 Results

    First Quarter Revenue of $931.1 Million Up 9.4% Over Prior Year Period

Business Wire

BRENTWOOD, Tenn. -- April 26, 2013

LifePoint Hospitals, Inc. (NASDAQ: LPNT) today announced results for the first
quarter ended March 31, 2013.

For the first quarter ended March 31, 2013, revenues from continuing
operations were $931.1million, up 9.4% from $851.0 million for the same
period a year ago. Income from continuing operations attributable to LifePoint
Hospitals, Inc. stockholders for the first quarter ended March 31, 2013,
decreased 42.4% to $32.3million, or $0.69 per diluted share, compared with
$56.0 million, or $1.16 per diluted share, for the same period a year ago,
which included a benefit of $0.33 per diluted share relating to the Medicare
Rural Floor settlement, as noted below.

The Company is providing the following additional information pertaining to
certain items that affected the Company’s financial performance for the first
quarters ended March 31, 2013 and March31, 2012:

  *Results for the first quarter ended March 31, 2013, included severance
    costs of $3.2 million, or $0.04 per diluted share, related to the
    reorganization of the Company’s Hospital Support Center,
  *Results for the first quarter ended March 31, 2013, included debt
    extinguishment costs of $4.4million, or $0.06 per diluted share, as a
    result of the issuance of Incremental Term Loans and the repurchase of the
    Company’s 2025 Convertible Notes, and
  *Results for the first quarter ended March 31, 2012, included the Medicare
    Rural Floor settlement, which increased revenues by $31.3 million and
    increased related costs by $5.7 million, for a net impact of $0.33 per
    diluted share.

In commenting on the results, William F. Carpenter III, chairman and chief
executive officer of LifePoint Hospitals, said, “While experiencing soft
volumes, we effectively controlled costs and cash flow from operations was
strong in the quarter. We are executing the right strategies, which address
both current market conditions and position us for healthcare reform, with a
focus on expanding existing market share and growing through acquisitions.”

A listen-only simulcast, as well as a 30-day replay, of LifePoint Hospitals’
first quarter 2013 conference call will be available on line at
www.lifepointhospitals.com/news/press-releases and www.earnings.com today,
Friday, April 26, 2013, beginning at 10:00 a.m. Eastern Time.

LifePoint Hospitals, Inc. is a leading hospital company focused on providing
quality healthcare services close to home. Through its subsidiaries, LifePoint
operates 57 hospital campuses in 20 states. With a mission of “Making
Communities Healthier®,” LifePoint is the sole community hospital provider in
the majority of the communities it serves. More information about the Company,
which is headquartered in Brentwood, Tennessee, can be found on its website,
www.LifePointHospitals.com. All references to “LifePoint,” “LifePoint
Hospitals,” or the “Company” used in this release refer to LifePoint
Hospitals, Inc. or its affiliates.

Important Legal Information. Certain statements contained in this release are
based on current management expectations and are “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, and are
intended to qualify for the safe harbor protections from liability provided by
the Private Securities Litigation Reform Act of 1995. Numerous factors exist
which may cause results to differ from these expectations. Many of the factors
that will determine our future results are beyond our ability to control or
predict with accuracy. Such forward-looking statements reflect the current
expectations and beliefs of the management of LifePoint, are not guarantees of
performance and are subject to a number of risks, uncertainties, assumptions
and other factors that could cause actual results to differ from those
described in the forward-looking statements. These forward-looking statements
may also be subject to other risk factors and uncertainties, including without
limitation: (i) the effects related to the enactment and implementation of
healthcare reform, the possible enactment of additional federal or state
healthcare reforms and possible changes in healthcare reform laws and other
federal, state or local laws or regulations affecting the healthcare industry
including the timing of the implementation of reform; (ii) the extent to which
states support increases, decreases or changes in Medicaid programs, implement
healthcare exchanges or alter the provision of healthcare to state residents
through regulation or otherwise; (iii) delays in receiving payments for
services provided, reductions in Medicare or Medicaid payments (including
increased recoveries made by Recovery Audit Contractors (RAC) and similar
governmental agents), compared to the timing of expanded coverage; (iv)
reductions in reimbursements from commercial payors, whether due to a change
in our revenue mix, service mix, reduction in commercial rates or otherwise;
(v) our ability to acquire hospitals and other healthcare providers on
favorable terms, the business risks and costs associated therewith and the
uncertainty in operating and integrating such hospitals and other providers;
(vi) our ongoing ability to demonstrate meaningful use of certified electronic
health record technology and recognize income for the related Medicare or
Medicaid incentive payments ; (vii) the failure or closure of employers in our
markets, especially those that are dependent on a small number of local
employers; (viii) the growth of “bad debt” and “patient due” accounts, the
number of individuals without insurance coverage (or who are underinsured) who
seek care at our hospitals, and deterioration in the collectability of these
accounts; (ix) changes in general economic conditions nationally and
regionally in our markets; (x) whether our core strategies will result in
anticipated operating results, including measureable quality and satisfaction
improvements; (xi) whether our efforts to reduce the cost of providing
healthcare while increasing the quality of care are successful; (xii) the
ability to attract, recruit and retain qualified physicians, nurses, medical
technicians and other healthcare professionals and the increasing costs
associated with doing so, including the direct costs associated with employing
physicians and other healthcare professionals; (xiii) the loss of certain
physicians in markets where such a loss can have a disproportionate impact on
our hospital in such market; (xiv) the application, interpretation and
enforcement of increasingly stringent and complex laws and regulations
governing our operations and healthcare generally (and changing
interpretations of applicable laws and regulations), related enforcement
activity and the potentially adverse impact of known and unknown government
investigations, litigation and other claims that may be made against us; (xv)
any interruption of or restriction in our access to licensed information (and
information technology systems) or failure in our ability to integrate changes
to LifePoint’s existing information systems or information systems of acquired
hospitals; (xvi) the highly competitive nature of the health care business;
(xvii) adverse events in states where a large portion of our revenues are
concentrated; (xviii) the availability and terms of capital to fund the
expansion of our business and improvements to our existing facilities, and any
changes in accounting practices; (xix) liabilities resulting from potential
malpractice and related legal claims brought against our hospitals or the
healthcare providers associated with, or employed by, such hospitals or
affiliated entities; (xx) our increased dependence on third parties to provide
purchasing, revenue cycle and payroll services and information technology and
whether they are able to do so effectively; (xxi) the continued viability of
Duke – LifePoint Healthcare and our partnership with Duke University Medical
Center; and (xxii) those other risks and uncertainties described from time to
time in our filings with the Securities and Exchange Commission. Therefore,
our future results may differ materially from those described in this release.
LifePoint undertakes no obligation to update any forward-looking statements,
or to make any other forward-looking statements, whether as a result of new
information, future events or otherwise.

All references to “our,” “LifePoint,” “LifePoint Hospitals” and the “Company”
as used throughout this release refer to LifePoint Hospitals, Inc. and its
subsidiaries.

                        
LIFEPOINT HOSPITALS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Dollars in millions, except per share amounts
                           
                           Three Months Ended March 31,
                           2013                      2012                 
                                           % of                       % of
                           Amount                     Amount     
                                           Revenues                   Revenues
Revenues before
provision for doubtful     $ 1,100.2                    $ 998.1
accounts
Provision for doubtful      169.1                      147.1 
accounts
Revenues                     931.1         100.0  %       851.0       100.0  %
                                                                      
Salaries and benefits        433.2         46.5           370.0       43.5
Supplies                     144.7         15.5           129.0       15.2
Other operating              221.5         23.8           188.5       22.0
expenses
Other income                 (5.7    )     (0.6   )       (1.2  )     (0.1   )
Depreciation and             55.8          6.0            45.1        5.3
amortization
Interest expense, net        23.9          2.6            25.5        3.0
Debt extinguishment          4.4           0.5            –           –
costs
Impairment charge           –            –            3.1        0.4    
                            877.8        94.3         760.0      89.3   
                                                                      
Income from continuing
operations before            53.3          5.7            91.0        10.7
income taxes
Provision for income        20.3         2.2          34.1       4.0    
taxes
Income from continuing       33.0          3.5            56.9        6.7
operations
                                                                      
Income from
discontinued                0.1          0.1          0.1        –      
operations, net of
income taxes
Net income                   33.1          3.6            57.0        6.7
Less: Net income
attributable to             (0.7    )     (0.1   )      (0.9  )     (0.1   )
noncontrolling
interests
Net income
attributable to            $ 32.4         3.5    %     $ 56.1       6.6    %
LifePoint Hospitals,
Inc.
                                                                      
Earnings per share
attributable to

LifePoint Hospitals,
Inc. stockholders:
Basic                      $ 0.71                      $ 1.19  
Diluted                    $ 0.69                      $ 1.16  
                                                                      
Amounts attributable
to LifePoint
Hospitals, Inc.
stockholders:
Income from continuing
operations, net of         $ 32.3                       $ 56.0
income taxes
Income from
discontinued                0.1                        0.1   
operations, net of
income taxes
Net income                 $ 32.4                      $ 56.1  

                                                       
LIFEPOINT HOSPITALS, INC.

UNAUDITED EARNINGS PER SHARE CALCULATIONS

In millions, except per share amounts
                                                         
                                                         Three Months Ended

                                                         March 31,
                                                         2013       2012
Income from continuing operations                        $ 33.0       $ 56.9
Less: Net income attributable to noncontrolling           (0.7 )      (0.9 )
interests
Income from continuing operations attributable to          32.3         56.0
LifePoint Hospitals, Inc. stockholders
Income from discontinued operations, net of income        0.1        0.1  
taxes
Net income attributable to LifePoint Hospitals, Inc.     $ 32.4      $ 56.1 
                                                                      
Weighted average shares outstanding – basic                45.8         47.0
Effect of dilutive securities: stock options and other    1.4        1.3  
stock-based awards
Weighted average shares outstanding – diluted             47.2       48.3 
                                                                      
Earnings per share attributable to LifePoint
Hospitals, Inc. stockholders:
Basic                                                    $ 0.71      $ 1.19 
Diluted                                                  $ 0.69      $ 1.16 

                                                             
LIFEPOINT HOSPITALS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

In millions
                                                                  
                                                 March 31,        Dec. 31,

                                                 2013             2012
ASSETS
Current assets:
Cash and cash equivalents                        $ 160.4          $ 85.0
Accounts receivable, less allowances for
doubtful accounts of $610.9 and $558.4 at          562.1            518.8
March 31, 2013, and December 31, 2012,
respectively
Inventories                                        96.3             97.0
Prepaid expenses                                   36.2             31.8
Deferred tax assets                                149.9            142.5
Other current assets                              53.6           50.2     
                                                   1,058.5          925.3
                                                                  
Property and equipment:
Land                                               102.1            101.9
Buildings and improvements                         1,823.3          1,815.2
Equipment                                          1,320.5          1,289.7
Construction in progress                          80.7           81.0     
                                                   3,326.6          3,287.8
Accumulated depreciation                          (1,303.6 )      (1,256.9 )
                                                   2,023.0          2,030.9
                                                                  
Deferred loan costs, net                           17.1             21.9
Intangible assets, net                             81.9             84.5
Other                                              38.1             47.8
Goodwill                                          1,611.5        1,611.8  
Total assets                                     $ 4,830.1       $ 4,722.2  
                                                                  
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                                 $ 113.3          $ 117.4
Accrued salaries                                   110.9            128.2
Income taxes payable                               27.7             0.7
Other current liabilities                          204.4            185.3
Current maturities of long-term debt              567.7          13.3     
                                                   1,024.0          444.9
                                                                  
Long-term debt                                     1,158.4          1,696.5
Deferred income tax liabilities                    247.6            249.2
Long-term portion of reserves for                  138.6            133.0
self-insurance claims
Other long-term liabilities                        83.8             79.2
Long-term income tax liability                    16.9           16.9     
Total liabilities                                 2,669.3        2,619.7  
                                                                  
Redeemable noncontrolling interests                29.8             29.4
                                                                  
Equity:
LifePoint Hospitals, Inc. stockholders’
equity:
Preferred stock                                    –                –
Common stock                                       0.6              0.6
Capital in excess of par value                     1,435.8          1,403.5
Accumulated other comprehensive income             0.2              0.2
Retained earnings                                  1,251.2          1,218.8
Common stock in treasury, at cost                 (579.7   )      (572.6   )
Total LifePoint Hospitals, Inc.                    2,108.1          2,050.5
stockholders’ equity
Noncontrolling interests                          22.9           22.6     
Total equity                                      2,131.0        2,073.1  
Total liabilities and equity                     $ 4,830.1       $ 4,722.2  

                                                   
LIFEPOINT HOSPITALS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollars in millions
                                                      
                                                      Three Months Ended

                                                      March 31,
                                                      2013         2012
Cash flows from operating activities:
Net income                                            $ 33.1         $ 57.0
Adjustments to reconcile net income to net cash
provided by operating activities:
Income from discontinued operations                     (0.1   )       (0.1  )
Stock-based compensation                                6.8            6.8
Depreciation and amortization                           55.8           45.1
Amortization of physician minimum revenue               4.5            5.0
guarantees
Amortization of debt discounts                          5.9            6.3
Amortization of deferred loan costs                     1.2            1.5
Debt extinguishment costs                               4.4            –
Impairment charge                                       –              3.1
Deferred income tax benefit                             (7.1   )       (21.5 )
Reserve for self-insurance claims, net of               4.6            4.7
payments
Increase (decrease) in cash from operating assets
and liabilities, net of effects from acquisitions
and divestitures:
Accounts receivable                                     (29.5  )       (82.4 )
Inventories and other current assets                    (6.1   )       1.0
Accounts payable and accrued expenses                   (10.2  )       (6.9  )
Income taxes payable/receivable                         27.0           54.0
Other                                                  1.5          0.2   
Net cash provided by operating activities –             91.8           73.8
continuing operations
Net cash provided by (used in) operating               0.4          (0.8  )
activities – discontinued operations
Net cash provided by operating activities              92.2         73.0  
                                                                     
Cash flows from investing activities:
Purchases of property and equipment                     (38.5  )       (60.8 )
Acquisitions, net of cash acquired                      (1.3   )       (20.1 )
Other                                                  0.2          (0.2  )
Net cash used in investing activities                  (39.6  )      (81.1 )
                                                                     
Cash flows from financing activities:
Proceeds from borrowings                                323.0          –
Payments of borrowings                                  (313.6 )       –
Repurchases of common stock                             (7.1   )       (5.5  )
Payment of debt financing costs                         (0.9   )       –
Proceeds from exercise of stock options                 23.6           3.9
Proceeds from employee stock purchase plans             –              0.7
Distributions to noncontrolling interests               (1.5   )       (0.7  )
Capital lease payments and other                       (0.7   )      (0.4  )
Net cash provided by (used in) financing               22.8         (2.0  )
activities
                                                                     
Change in cash and cash equivalents                     75.4           (10.1 )
Cash and cash equivalents at beginning of period       85.0         126.2 
Cash and cash equivalents at end of period            $ 160.4       $ 116.1 
                                                                     
Supplemental disclosure of cash flow information:
Interest payments                                     $ 7.2         $ 8.0   
Capitalized interest                                  $ 0.4         $ 0.8   
Income tax payments, net                              $ 0.5         $ 1.6   

                                      
LIFEPOINT HOSPITALS, INC.

UNAUDITED STATISTICS
                                         
                                         Three Months Ended March 31,
                                                                     %
                                         2013        2012       
                                                                     Change
Continuing Operations: ^(1)
Number of hospitals at end of period       57            53          7.5   %
Admissions                                 52,249        51,488      1.5
Equivalent admissions ^(2)                 116,463       112,295     3.7
Revenues per equivalent admission        $ 7,995       $ 7,578       5.5
Medicare case mix index                    1.37          1.30        5.4
Average length of stay (days)              4.7           4.4         6.8
Inpatient surgeries                        13,540        13,605      (0.5  )
Outpatient surgeries                       44,036        42,999      2.4
Emergency room visits                      292,002       272,913     7.0
Outpatient factor ^(2)                     2.23          2.18        2.3
                                                                     
Same-hospital: ^(3)
Number of hospitals at end of period       53            53          -     %
Admissions                                 48,475        51,488      (5.9  )
Equivalent admissions ^(2)                 106,839       112,295     (4.9  )
Revenues per equivalent admission        $ 7,773       $ 7,578       2.6
Medicare case mix index                    1.35          1.30        3.8
Average length of stay (days)              4.5           4.4         2.3
Inpatient surgeries                        12,216        13,605      (10.2 )
Outpatient surgeries                       40,027        42,999      (6.9  )
Emergency room visits                      273,887       272,913     0.4
Outpatient factor ^(2)                     2.20          2.18        0.9


       Continuing operations information includes the results of (i) our
       hospital support center, (ii) our same-hospital operations, (iii) the
       results of Scott Memorial Hospital (“Scott Memorial”), which we
       acquired effective January 1, 2013, though our joint venture with
^(1)  Norton Healthcare, Inc., (iv) Marquette General Health System
       (“Marquette General”), which we acquired effective September 1, 2012,
       Twin County Regional Hospital (“Twin County”), in which we acquired an
       80% interest effective April 1, 2012, each through Duke LifePoint
       Healthcare and (v) Woods Memorial Hospital (“Woods Memorial”), which we
       acquired effective July 1, 2012.

       Management and investors use equivalent admissions as a general measure
       of combined inpatient and outpatient volume. We compute equivalent
       admissions by multiplying admissions (inpatient volumes) by the
       outpatient factor (the sum of gross inpatient revenue and gross
^(2)   outpatient revenue and then dividing the resulting amount by gross
       inpatient revenue). The equivalent admissions computation “equates”
       outpatient revenue to the volume measure (admissions) used to measure
       inpatient volume resulting in a general measure of combined inpatient
       and outpatient volume.

       Same-hospital information includes the results of our hospital support
^(3)   center and the same 53 hospitals operated during the three months ended
       March 31, 2013 and 2012. Same-hospital information excludes the results
       of Scott Memorial, Marquette General, Twin County and Woods Memorial.


LIFEPOINT HOSPITALS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
Dollars in millions, except Diluted EPS amounts

Adjusted EBITDA is defined by the Company as earnings before depreciation and
amortization; interest expense, net; debt extinguishment costs; impairment
charge; provision for income taxes; income from discontinued operations, net
of income taxes; and net income attributable to noncontrolling interests.
LifePoint’s management and Board of Directors use Adjusted EBITDA to evaluate
the Company’s operating performance and as a measure of performance for
incentive compensation purposes. LifePoint’s credit facilities use Adjusted
EBITDA for certain financial covenants. The Company believes Adjusted EBITDA
is a measure of performance used by some investors, equity analysts and others
to make informed investment decisions. In addition, multiples of current or
projected Adjusted EBITDA are used to estimate current or prospective
enterprise value. Adjusted EBITDA should not be considered as a measure of
financial performance under U.S. generally accepted accounting principles
(“GAAP”), and the items excluded from Adjusted EBITDA are significant
components in understanding and assessing financial performance. Adjusted
EBITDA should not be considered in isolation or as an alternative to net
income, cash flows generated by operating, investing or financing activities
or other financial statement data presented in the consolidated financial
statements as an indicator of financial performance or liquidity. Because
Adjusted EBITDA is not a measurement determined in accordance with GAAP and is
susceptible to varying calculations, Adjusted EBITDA as presented may not be
comparable to other similarly titled measures of other companies.

                                                                        
               Three Months Ended March 31,
               2013                         2012                   
                                 % of                           % of
               Amount                        Amount      
                                 Revenues                       Revenues
Revenues
before
provision      $ 1,100.2                        $ 998.1
for
doubtful
accounts
Provision
for             169.1                          147.1 
doubtful
accounts
Revenues         931.1           100.0  %         851.0         100.0  %
                                                                             
Salaries
and              433.2           46.5             370.0         43.5
benefits
Supplies         144.7           15.5             129.0         15.2
Other
operating        221.5           23.8             188.5         22.0
expenses
Other           (5.7    )       (0.6   )        (1.2  )       (0.1   )
income
                793.7          85.2           686.3        80.6   
Adjusted       $ 137.4          14.8   %       $ 164.7        19.4   %
EBITDA

The following table reconciles Adjusted EBITDA as presented above to net
income attributable to LifePoint Hospitals, Inc. as reflected in the unaudited
condensed consolidated statements of operations:

                                                Three Months Ended
                                                                         
                                                March 31,
                                                2013         2012
Adjusted EBITDA                                 $ 137.4         $ 164.7
Less: Depreciation and amortization               55.8            45.1
Interest expense, net                             23.9            25.5
Debt extinguishment costs                         4.4             –
Impairment charge                                 –               3.1
Provision for income taxes                        20.3            34.1
Income from discontinued operations, net of       (0.1  )         (0.1  )
income taxes
Net income attributable to noncontrolling        0.7           0.9   
interests
Net income attributable to LifePoint            $ 32.4         $ 56.1  
Hospitals, Inc.

Contact:

LifePoint Hospitals, Inc.
Jeff Sherman, 615-372-8501
Executive Vice President and
Chief Financial Officer
 
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